Top 5 Credit Score Myths You Should Know

Top 5 Credit Score Myths You Should Know

Do you believe you can have multiple credit scores? Are you aware that your income cannot affect your credit score in any case? If these statements are news to you, then, you may need to read the rest of this post to get an idea of the top 5 credit score myths and avoid being misled.

Myth 1: Each entity has as single credit score

You should not forget the fact that in Canada there are two credit scoring companies (The TransUnion and Equifax). These credit reporting agencies determine credit scores and credit reports for consumers based on the financial information that can be gathered. This financial information is supplied by the creditor. In most cases, the creditor might not report to one company and avails the financial details about their customers to the other credit scoring agency.

This implies that the two credit scoring agencies in Canada might not have the same financial information about you. Therefore, your credit score and credit reporting system might end up generating different figures of your credit score. If anyone tells you that you cannot have more than one credit score, then, the argument might not be true.

Myth 2: You can get a free credit score annually

The truth is that you can get a free credit report every year from the two credit scoring and reporting agencies in Canada. However, you have to pay a specified fee for you to get access to your credit score from these two agencies.

Myth 3: If you earn good income, your credit score can better

You should not forget the fact that your income or occupation is not part of the formula used to determine your credit score. Even if you are a famous person or a rich person, that doesn’t matter when it comes to determining your credit report and your credit score.

Myth 4: The credit for spouses is indifferent

Note that a credit scoring system isn’t different from drivers licensing system in the sense that each person has their own record. No one can share a credit score with his or her spouse. However, if you and your spouse take debts jointly and make the necessary debt settlement jointly then there is a possibility that you will have similar credit scores. But still, your credit scores might be different especially if you have varying durations when it comes to how long you have had credit.

Myth 5: Bankruptcy permanently ruins your credit

The reality is that bankruptcy doesn’t ruin your credit permanently. Note that if you’re declared bankrupt, the impact of that declaration on your credit score will last for six to seven years depending on where you live. During this period, your credit score will be affected and obtaining credit will be a difficult task for you.

However, after seven years, the bankruptcy and other bad credit records will be eliminated from your credit report. This will be a new beginning for you. Therefore, if you’re struggling with debts and the debt consolidation might not work for you, you can apply for bankruptcy!

Knowing the myths and truths about credit score will help you to opt for better methods when it comes to debt settlement Toronto or enhancing and maintaining a positive credit score.